Industrial system 

1. Inputs: things/resources/raw materials/what is needed for production to take place. Eg. raw materials, labour, energy, capital

2. Processes: stages of production; activities done to convert inputs/raw materials to outputs/finished products.

3. Outputs: finished products; things produced in the factory to sell

• By-products: left over from the main production process and has some value, so can therefore be sold. 

• Waste products: have no value and must be disposed of.

 

Raw materials: items which are processed in factory/materials used to produce or make a product/resources from the land or sea.

Market: place where finished products are sold/people who buy products/finished goods.

Labour costs: Cost of wages for payment for workers/cost to pay employees/staff. 

 

Manufacturing industry (secondary industry)

Manufacturing: the making of products/changing raw materials into products.

Manufacturing industry: Where (raw) materials are turned into finished products.

 

Classification of manufacturing/ secondary industry

1. Large scale & small scale (size of plant/machinery/no. of ppl employed)

2. Heavy & light (nature of processes & unit weight of products)

3. Market oriented & raw material oriented (location - near market/raw materials)

4. Capital intensive & labour intensive 

5. Fordist & flexible 

6. National & transnational

7. Processing & assembly

 

Heavy industry

• Uses large amount of bulky raw materia;s

• Processes on a huge scale

• Produces final products of significant size

• Eg. iron & steel industry 

 

Light industry: Eg. assembly of computers

 

Fordist industry (eg. assembly line)

• Makes standardised products

• Mass produces on a large scale 

 

Flexible industry

• Makes a range of specialised products

• Uses high technology to quickly respond to changes in demand

 

Processing industry: involves changing (raw) materials/inputs into a finished product. 

• Often located close to raw materials.

• Eg. iron & steel industry.

 

Assembly industry: An industry/factory where components/materials are put together.

• Have a wide choice of location = ‘footloose industries’.

• Eg. large car assembly plant.

 

High technology industry: involves making of technologically advanced products (silicon chips, computers, software, robots, aerospace components).

• High investment in scientific research

• Often clustered together in science parks (companies can collaborate on projects)

• Often in close proximity to leading universities (qualified employees required)

 

How growth of high technology industry benefits people and economy of that country.

• Creation of jobs

• Skills gained

• High salaries/wages/people become better off

• Increased GNP/economy grows/wealth of country increases/makes economy stronger

• Benefits balance of payments/more foreign currency

• More money earned through taxation

• More exports/reduced imports

• Multiplier effect

• Health care/education/services can be improved

• Infrastructural development/roads/electricity/water supplies

• Standard of living improves/quality of life improves

• Increased personal spending on housing/clothing/food/healthcare

 

Why high technology industries have grown in newly industrialised countries (NICs)

• Low cost of land

• Low cost labour

• Availability of electricity

• Highly-skilled workers/educated workforce/universities

• Good transport infrastructure

• Reduced transport costs of finished product

• Enables access to global market

• Large/growing local market

• Government incentives

• Lower taxes

• Less unions

• Work ethic/prepared to work long hours

• Lack of competition;

• Agglomeration/companies are already there. 

 

Changes in the percentage employed in manufacturing industry changes as a country develops

Initial increase 

• Industrialisation/jobs in agriculture are mechanised

• Low skill/manual work in factories means many people are employed/labour intensive

• Transnational companies set up factories

 

Eventual decrease 

• Mechanisation/automation leads to less employment in manufacturing as the country develops further

• Transnational companies leave the country

• With increasing wealth the economy becomes more based on tertiary sector

• Manufactured goods are imported

• It may be cheaper to import rather than manufacture

 

Why labour costs are higher in some industries than others

• Some industries are less mechanised than others 

• Some jobs have to be done by hand/some jobs are more labour intensive/some require more physical effort

• Some jobs cannot be done by machinery

• Some jobs are higher paid/higher salaries/highly skilled

 

Transnational Corporations

How TNCs bring both advantages & disadvantages to LEDCs

Advantages 

• Employment/higher wages

• Skills development

• Encourages development/economic growth/improves the economy

• Improvement electricity/water supply

• Improvement of transport network/roads/airports;

• New technology

• Government income / taxes

• Multiplier effect

 

Disadvantages

• Low pay

• Exploitation

• Profits go abroad/not kept locally/economic leakage

• High paid jobs filled by foreigners

• Competition for local industry

• Specified pollution

• Traffic congestion

• Depletion of resources 

• Can pull out at any time 

 

Why companies produce goods in other countries.

• Cheaper labour

• Cheaper land/more land in other countries 

• Avoid import tariffs/taxes

• Close to major markets/reduces transport costs/more people to sell to

• Increase brand awareness/prestige in other countries

• To encourage international links/relationships

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Why some governments may not want to solve the problems caused by industries 

• Legislation would be too complex

• Costs too much/solutions are expensive

• Costs too much to treat people

• Government are more concerned about development than the people

• Government do not want to risk industry moving out of the country

• Wealth/money lost/it would reduce trade

• Could cause unemployment

• Corruption/government ministers may be receiving bribes from industry owners

• Negative multiplier effect 

 

Factors affecting the location of industries

• Availability of resources/raw materials: to reduce transport costs, especially if raw materials are bulky/heavy/perishable

• Availability of energy/electricity: to operate machinery 

• Near river: for cooling/water to use in processes

• Labour supply: as processes will require workforce 

• Cost of labour: as NICS are low cost

• Near University: for skilled labour

• Flat land: factories easily constructed 

• Large areas of land: for construction/expansion

• Cost of land: as large area will be needed

• In area not likely to flood: so factories will not be damaged/production halted 

• Road/rail transport: for transport of raw materials/goods 

  • Proximity to ports/sea/coast // navigable river/canal: to import/export 

  • Proximity to airports: for business travel abroad

  • Location of markets: to reduce transport costs, especially when products are bulky/heavy/perishable

  • Agglomeration: for economies of scale

  • Political factors: government policies/incentives

 

Factors considered when locating high technology industries

• Near to component manufacturers

• Location of universities/research establishments

• Availability of skills 

• Availability of workers

• Labour costs

• Large area of/flat/cheap land

• Close to motorway network

• Near to/access to airports/ports/good access for imports/exports

• Government policy 

• Location of large/growing markets

• Near to other high tech industries/agglomeration

• Near to pleasant environment

 

How location of industry is influenced by transport

• Near roads, railways/railway stations, ports/harbours/rivers/canals, airports

• Close to transport raw materials/inputs/imports when they are bulky/perishable

• Close to transport finished goods/outputs/exports when they are bulky/perishable

• Close to power supply (eg. coal) of they are heavy/ large amounts required 

• To reduce costs; Industries aim to keep transport costs as low as possible

• To increase speed

 

How location of manufacturing industry is influenced by political factors

• Governments encourage industrial growth in some areas

• Development Area/Enterprise Zone status: industries want to locate in areas of high unemployment/to create employment/enterprise zones

• Infrastructure/ready built sites provided

• Lower tax rates in some areas

• Rent free/rate free sites

• Availability of grants/subsidies/incentives to locate in some areas

• Government may offer low interest loans

• Government protects certain areas from industrial growth/pollution

• Planning permission is not possible in all places: protected land/not allowed to build/laws preventing industry near houses

• Strong trade unions discourage industrial development in some areas

• Strict/lenient legislation about pollution in some areas

• Political instability/political conflict/wars discourage 

 

Industrial agglomeration: The clustering together of economic activities. Success of one company may attract other companies from the same industry group.